France PMI October 2017

France: Flash composite PMI points to strong expansion in October

October 25, 2017

The IHS Markit flash composite Purchasing Managers’ Index (PMI) increased from 57.1 points in September to 57.5 points in October, surprising analysts who had expected the indicator to drop to 57.0 points. The figure marks the sixteenth consecutive month in which the PMI is above the 50-point threshold that separates expansion from contraction, and it also marked the best reading in almost six and a half years.

October’s increase was supported by strong growth in manufacturing output and services activity, the latter of which expanded at the sharpest pace since April 2011. Growth in both sectors was driven by another sharp rise in new business from domestic and foreign clients. Firms in the private sector increased staffing levels to accommodate higher demand volumes, pushing the rate of job creation to the highest in almost ten and a half years. Despite taking on additional staff, backlogs of works continued to accumulate partly due to supply-side constraints. Taking a look at price developments, output prices rose as firms passed on higher input costs to clients.

“The latest flash PMI data highlight a strong start to the fourth quarter for the French private sector, with output increasing to the greatest extent in nearly six-and-a-half years. Further encouragement was provided by the broad-based nature of the expansion, with output growth accelerating in both the manufacturing and service sectors, each underpinned by solid client demand.”

FocusEconomics Consensus Forecast panelists see fixed investment growing 1.8% in 2018, which is down 0.1 percentage points from last month’s estimate. For 2019, the panel sees investment expanding 2.5%.

According to the National Institute of Statistics and Economic Studies’ (INSEE) business climate survey on manufacturing activity, the business sentiment index inched up from 112 points in December to 113 points in January.

The IHS Markit flash composite Purchasing Managers’ Index (PMI) ticked up from a revised 59.6 points in December (previously reported: +60.0 points) to 59.7 points in January, marking one of the sharpest rates of expansion in the survey’s history.